Closing your Corporation can be as confusing as it is emotional and stressful. You have a lot to get done, and properly dissolving your Corporation in the state(s) where it is registered and formalizing a "dissolution agreement" between the shareholders are among the most important.
Dissolving your Corporation properly is a critical step to ensure you do not become personally liable for the debts or liabilities of the Corporation. If you do not follow all the proper steps to dissolving a Corporation, you run the risk of incurring significant tax and other penalties, even when you had no income and no tax due! For example, did you know that for each month or portion of a month your IRS federal tax return is late, you are penalized $195, for a maximum of 12 months multiplied by the number of shareholders?
And, if you don’t have a “dissolution agreement” in place between you and the other owners (or members) of the Corporation, you run the risk of a former shareholder doing something to create personal liability for you, or later file a lawsuit against you claiming you harmed them or the Corporation.
Dissolving a Corporation can be a bit complicated, but there are a number of critical steps that MUST be followed:
Technically, you should initiate the dissolution process immediately after the shareholders and/or Board of Directors have decided to close or dissolve the company. You definitely don’t want to wait too long, especially if you’re approaching year’s end (to avoid having to submit next year’s taxes) or if you have disputes or debates among the owners.
To properly dissolve a Corporation, you need to follow the requirements in the Bylaws (or relevant statute). If there are no Bylaws, then you need to default to what the law is in the domestic state where the Corporation is filed. These requirements usually deal with voting percentages for the owners, properly distributing assets, and paying off liabilities.
After handling the formalities of a proper wind-down of a Corporation, then you need to file paperwork with the state(s) where registered, with the IRS and to put a dissolution agreement together with all the owners. Specific paperwork includes (but is not necessarily limited to):
Our affordable flat-rate pricing makes it easy to dissolve your Corporation online in minutes, with an offering that is customized for the unique requirements of you and your Corporation. Fill out our short dissolution questionnaire and our staff of experienced attorneys and paralegals will handle the rest.
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